A few things came up recently that have led me to this conclusion.
- https://www.afr.com/companies/energy/world-is-at-a-tipping-point-for-climate-action-execs-say-20220124-p59qui
- https://www.zerohedge.com/geopolitical/epitome-whats-wrong-world-right-now
- https://capitalistexploits.at/like-saudi-arabia-banning-oil-exports-owtw/
- A long conversation with a socialist friend who loves a good debate
- https://en.wikipedia.org/wiki/Phase-out_of_fossil_fuel_vehicles
- https://au.finance.yahoo.com/quote/BRNT.MI?p=BRNT.MI
We’ve all noticed the prices going up at the bowser. Fossil fuels aren’t dead by a long stretch. Europe is tying itself in knots trying to reach renewable energy targets like it’s a race. Germany has rooted its industry by first relying on Russia for fossil fuels and then by shutting down its nuclear power industry. Several countries have promised to ban the sale of fossil fuel vehicles by 2030. This is very close indeed. IMO it won’t happen because the transition will be so badly managed that widespread suffering will be the result.
The banning incandescent lightbulbs in Australia should never have occurred. At the time in 2006, CFL bulbs were the main alternative. A few years later LED bulbs were widespread and have replaced CFL because they were superior in every way, and cheaper. Who would buy incandescent today given the choice? A few people who believe in the benefits of full spectrum lighting, but not many.
EVs are already quite driveable but problems with range, upfront cost, recharging times, the distribution of charging points, and the electricity grid are not yet solved. EV makers are already incentivised to solve these problems. An artificial deadline imposed by governments will not make them solve these problems faster, and might even disincentivise them because their market will grow whether they improve or not.
The bigger problem is the degree of unity among elites that this is what must be done. ESG AFAIK means maxing on renewable energy ASAP plus maxing on race diversity. These things get repeated all the time now in the sychophant’s guide to the Australian elite (the AFR). The survey by Deloitte in my links above, as reported by the AFR, says
“The 2022 Deloitte CxO Sustainability Report, which surveyed 102 Australian business chiefs, found 74 per cent of Australian executives believe the world must act now to minimise the impact of climate change, up from 52 per cent one year ago.”
Do we really think that in the space of a year 25 or so more top execs changed their mind after careful consideration of the facts and theories. I don’t. This is groupthink in operation. Changes of mind like this are reminiscent of lead up to the gay marriage poll. They don’t represent a purely rational evaulation of the truth of the substance of each side of a debate. Instead, they represent a triumph of the human need to fit in to the group that is perceived to have the greatest influence. So who is it that is perceived to have the greatest influence and how did they get there? Part of the answer is that Australian elites follow the example of their foreign funders be they Chinese or American. A shift away from China during COVID might explain some of this. Isn’t democracy supposed to throw up alternative views to select from? Where are they?
Either way, provided you can reasonably calculate how long the truth can be ignored, there are some investing opportunities here. Also, ordinary people will not benefit.
No, it’s supposed to give you the illusion that you have a choice….
That illusion is so well ingrained that despite all evidence to the contrary people still believe it.
But slightly more on topic groupthink always dominates in the career ceo/board positions. It’s far easier to get your next job when you stuff up and can say, how could I know everyone else thought the same than if you are out on your own making some brave call.
Anyone willing to make those calls, and getting them right is more likely to be running their own business than be in the boardroom merry-go-round.
Great post. Completely agree on all points.
Great post! It is also why none of the EmBee crew can work out why we lack economic complexity. No one is willing to take the risk of being too different.
And there are few incentives to take said risk, generally.
Add to bjws point,middle management are probably worse. Just want to keep their $300k p.a. jobs at all costs regardless of whatever happens with the business.
This is why managers of manager roles and upwards become all about politics and spin than reality also.
You say it’s far easier, but I think that is not necessarily true, and even if it is true, it’s more true in some places than others. E.g. Americans seem to have much more respect and tolerance for those who get knocked down and keep getting up again than just about any other western country. They also are much less likely to take their position in society for granted. Just as many have risen, many have fallen.
I think the transition to electric cars will happen a lot faster than governments are anticipating.
By 2030 electric cars will have a 1000km range after five minutes of charging. Better performance, cheaper to run, more reliable, less maintenance, price will only come down over time. No doubt governments will slap mileage taxes of course. Everything about electric cars will be better.
I shall file that in with my Concorde and VFT newspaper clippings 🙂
I think they will get there, but I’m not convinced it will happen by 2030.
Good article.
Based on what exactly?
Battery tech is old. Centuries old.
Lithium battery tech is 25 years old.
All the easy gains have been made long ago. Performance and cost are not going to improve by any big steps any more. What we have now is what you get out of electric cars and won’t change by any more than internal combustion has for the last 30 years.
I would somewhat agree. EVs are being pushed as a solution as the status quo (roads) can be maintained. There are better solutions for solving climate change, but the 1% won’t line their pockets.
i’d be fine with moving away from private automobile ownership period, fewer cars on the roads, maybe about 10-15% of the population should own and drive a car.
Mr Schwab is that You?
The only problem with that is you have to completely reorganise society, and the only way to practically achieve it is probably a command economy, or a very long transition of massive tax increases, neither of which will be very popular.
i know it will never happen but thats what i would like.
That is what the Greens want:
Very brief and to the point!
Guess which side of the wealthy/peasant divide the greens all fall on….
Once the vaccines start killing people off there probably will only be that many left that can drive anyway
I think by 2027 we’ll have had big breakthroughs with batteries, cost half as much, quarter the size, 5 minute charge, 1000km range. It will be standard on all cars by the end of the decade.
Follow the science… The chemistry to be precise.
There is no new tech in batteries “just around the corner”.
The only possible breakthrough is capacitors but they are also a century old and well understood.
What is the difference charging a 2012 Tesla Model S versus in 2022?
Seems in the last decade the batteries are just getting mostly bigger to generate bigger range
Hard to see in 5 years any of the things you claim to actually happen.
https://www.google.com/search?q=Tesla+range&client=ms-android-motorola-rvo3&prmd=nisxv&sxsrf=AOaemvLN2TAEIdEpPDHmEE59R8p3sT-7Lw:1643089018797&source=lnms&tbm=isch&sa=X&sqi=2&ved=2ahUKEwjPrLLKl8z1AhU7FrkGHZGEBMUQ_AUoAnoECAIQAg&biw=432&bih=844&dpr=2.5#imgrc=fjGT7cYVMaUbbM
Tesla has had no real competition. Merc has a 1000km range car for 2024.
Even with 500km range that’s enough for 99% of people.
Could they make dorky supplementary battery-trailers that could be hooked up to be towed for longer trips?
500kg Batteries at the bottom, luggage space at the top?
$100 daily rental?
They can French Startup Releases A Towable Range Extender For Your EV | Drive
I think in reality there will be a transitionary period of more recharge stations on popular long pieces of road. Freight trucks etc that have to travel all over the place will have range extender motors (to charge the battery on the move).
They have already thought of and made the dorky trailers? Neat!
they already do that on the big yellow mining trucks – diesel generator + electric motor.
interestingly the big yellow trucks are going to try going full-electric: https://cleantechnica.com/2021/09/06/caterpillar-and-bhp-plan-to-create-battery-powered-mining-trucks/
if they can get that realised, presumably they can do the same for road-going freight trucks too….
Sure, as long as you are happy with a 30% reduction in load capacity to carry all the battery you need.
I don;’t think there is going to be much demand though, that’s why the Tesla semi is still an elon wet dream years past the set delivery date.
They also have done it on trains forever, but it isn’t really the same thing. At that power level and required reduction an “electric gearbox” is just a better solution than a mechanical one. The generator/electric motor combo are just a very reliable CVT that can handle enormous power.
Are they planning on charging them from the diesel generators running their remote mine sites?
or a diesel generator range extender..yay …
biodiesel of course
To paraphrase Charlton Heston:
“I’ll give you my 4WD diesel-powered ute when you take it from my cold dead hands”
An interesting study on the environmental impacts of battery, hybrid, and ICE vehicles:
A Life Cycle Environmental Impact Comparison between Traditional, Hybrid, and Electric Vehicles in the European Context
In petrol/diesel powered cars you pour in a shit load of energy in a couple of minutes via hydrocarbons.
Can’t see how you can pour in enough energy to move a ton of weight 1000klm, in 5 minutes via electrons.
That transfer rate of energy is nearer to an explosion.
John Cadogan did a good video about Tesla having 2017 batteries in 2021 vehicles. Make of that what you will.
As for Elon Musk, someone else I forget who stated he is likely a public face for DARPA and other shady elements.
“Hey it’s me Elon, I’m the nice billionaire that tweets about dogecoin and wants to stick a chip in your brain.”
https://blog.canberradeclaration.org.au/2022/01/25/covid-conspiracy-theories/
Now for 9-11….
And another conspiracy theory blown out of the water:
Ivermectin Prophylaxis Used for COVID-19: A Citywide, Prospective, Observational Study of 223,128 Subjects Using Propensity Score Matching
https://www.cureus.com/articles/82162-ivermectin-prophylaxis-used-for-covid-19-a-citywide-prospective-observational-study-of-223128-subjects-using-propensity-score-matching
Now watch the pro-experimental vaxxers get to work on these results with their statistical torture instruments to force the numbers to say what they want them to say 🙂
Here’s the covering article from (gulp) Zerohedge:
Large, Peer-Reviewed Research Study Proves Ivermectin Works Against COVID-19
https://www.zerohedge.com/covid-19/large-peer-reviewed-research-study-proves-ivermectin-works
The pro vaxxers will just ignore it completely.
If only that were the end of it.
But, alas, the pro-vaxxers are not content to just ignore any data that questions the official narrative.
It is their solemn duty to not just challenge it, but to ridicule it, destroy it, reconfigure it with their toolkit of statistical torture instruments, and finally consign it to the realm of conspiracy.
Once done with that, they must then ensure that the authors of such data are demonised and discredited, and ultimately deplatformed.
Only then will humanity be truly safe.
I don’t know why, but that spray made me feel happy that I voted against gay marriage.
I did as well because I knew where it was going. And now they’re trying to normalize rock spiders. Scum.
Europe could reach its emissions targets, but that would mean a drastic cut in its immigration rate. Birth rates in Italy and Germany are some of the lowest in the world and their population would be shrinking meaning less demand for energy if it wasn’t for immigration.
Demographics is destiny and I guess Europe’s destiny will be to forever be as nice as possible to Russia every Autumn.
This is true but you are missing a mechanism. The reason most execs understand they better be pro esg is because of the index funds.
Unless a company has esg compliant processes, the big three BlackRock, Vanguard and State Street will not hold your firm in their funds. You can appreciate how this would hobble any firms ability to work markets.
No exec will jeopardize this. It’s an impossible ask for them.
There is also the broader underlying issue that listed companies hardly ever use the share market to actually fund themselves/their projects by issuing shares.
so they are not really “capital markets” most of the time.
Sure. But unless the shares go higher and strikes get hit, options don’t trigger and exec bonuses don’t get paid.
Quips aside for any publicly traded company the index funds provide a significant portion of liquidity. Without this the majority of corporate actions, i.e. standard financial engineering by corporate treasury, is impossible.
The hit to capex and opex financing would be impossible to endure. You are asking the company to commit suicide as they would become instantly unable to compete because their products would become too expensive.
I just don’t see it, mate.
Trading of company shares had absolutely bigger all with company’s capex, (let alone opex!). Corporate treasury don’t generally touch the equity.
Have you got some examples?
Yeah sorry I tried to expand because I realised my answer was probably bit vague.
The other point which might not be obvious is the index funds key source of cost control is parking assets at custodian under sec lending relationships. Hence they provide the critical liquidity.
A very specific one,
Just before tesla needs more funding to cover it’s losses Electric Jesus is very prone to announcing fanciful things like the electric semi or the tesla pickup thingy to bump the share price. These things of course being fantasy and not delivered.
Overall though, what more than the share options thingy is needed as an incentive?
Think like a banker. Let’s say I provide liquidity to a ag across my FX and rates desks, but because we have a good relationship we also provide asset financing for farm crop or something.
But let’s say cotton prices are falling so revenue is down. Management says reduce risk. So then I go to securities lending at say state street and short the shares. Because if the shares fall, because of cotton prices, I make money. It’s my hedge right. Or maybe I buy cds, again for a legitimate reason, to reduce my net exposure as a bank to this Ag firm.
This only works because there is enough liquidity that the custodian can offer the service. If the ag was not held in the index, the custodian would have fewer shares in their inventory. Hence the loans would be called in because I can’t hedge my risk as a banker in a cost effective manner.
It’s effectively a higher cost of financing which the ag’s competition will not have, net net making it uncompetitive as a firm. That’s just one corporate action type scenario right.
Mate, this does not happen!
Why? It’s totally normal. The regulator might tell management to reduce their exposure to X sector because the loan book is too heavily skewed in that direction. Management says reduce risk.
This is why credit default swaps were invented right. How else can you hedge any asset concentration in the loan book.
Say I have too much exposure to some mid size miner or oil producer. Prices go down. Risk schmo’s are screwing my happiness.
I could call in the loan and piss their treasurer off, ensuring no more business from them. Or I could tell the delta one or options desk to buy some protection on the down low. What would you do?
Possibly a good point but I think to make this claim you have to quantify the the amount of dosh in the various index funds. I’d be surprised (but confess ignorance) if the S&P 500 ETFs have any ESG policies, and I’d be surprised if any of the ESG ETFs are bigger than the S&P 500 ETFs. Of course the ESG ETFs don’t have to be bigger than the S&P 500 ETFs to make a big difference. If it is all about relative amounts of money then who drives the ESG demand? Is it governments? Have they created enough demand for it to be self sustaining? It seems that way, but it’s a lot of work to do the numbers properly. It would be interesting though.
That’s exactly the point. The general index’s have esg policies. The esg specific funds are a sideshow no one cares.